Secret #1. Buy brand new
There are so many benefits to buying brand a new unit, either off the plan or just completed or building a new home that can make the holding costs easier, and in many cases help create instant equity.
For example, when you buy brand new, you get the benefit of tax deductions from depreciation that can give you thousands back at tax time for no financial outlay. Depreciation is calculated over two areas. The depreciation of the cost of the actual building at 2.5% (with current policy looking at increasing to 4%) per annum over around 40 years, and the depreciation of the fixtures and fittings such as hot water systems, air conditioners, and other depreciable items over a range of one to seven years. The tax-deductible amount varies from property to property and is calculated by ordering a depreciation schedule once and can be each year over the life of the property.
The other benefits include rentability. It is often easier to rent a brand-new property as it has great appeal to a tenant. Who doesn’t like to be the first person to move into a property and enjoy that brand new smell!
Brand new also means that the building and appliances will all be under warranty which further reduces holding costs and reduces some of the curve balls that can come up when buying an existing property as an investment.
Another great benefit of buying a new house, townhouse or unit in Queensland is that it comes with a 12 month maintenance warranty and a 6.5 year structural warranty from the builder backed by the QBCC.
Secret #2. Get the right Loan Set up
We advocate for using a mortgage broker to get the loan that best suits your personal situation. Even more importantly, keeping your investment accounts separate to your personal life and expenses means you will have much more control over your investment expenses, and you won’t be draining your personal income to cover any out-of-pocket expenses.
Having an investment pot or a holding account with some available funds to begin the investment journey with, allowing time for the rent to come in, expenses to come out and at the end of the financial year adding the return from the tax benefits to top up the account will ensure there would be little or no mortgage stress from the investment property on your life.
Secret #3. Research and timing
One of the most important secrets to successful investing is getting the timing right and doing the right research to get the right property. Research can be quite tricky for a novice investor. Who do you listen to? How do you know if the area you are looking at is going to go through a strong growth period or is it already at the peak of the market.
At Think investment Realty, we have been doing property research for more than a decade and we have developed a 75 point systematic research formula to ensure we get our property selections spot on every time. Having had more than 18 years experience in teaching clients to invest in the right property at the right time, I enjoy sharing our wealth of information about the do’s and don’ts of property investing with prospective investors. Think Investment Realty has regular investment education events and wealth retreats where both existing clients and new can meet socialise and enjoy a glass of wine or two while learning all the tips and tricks of investing.
Secret #4. Never Sell…
Well, almost never. Buying and keeping property long term creates an abundance of wealth over time. As the property values go up, so does the rent, giving you an ongoing increasing income for the rest of your life. There are always opportunities to sell and take profit too, reinvesting in a new growth area for further profit.
Money devalues as the cost of living goes up. Petrol is a good example of this. It’s the same thing but costs more that 12 months ago. Debt is money, it goes down as the value of the property and the rental income increases.
My team and I work closely with our clients and interested investors, assisting them to buy great investment properties for future wealth, as well as assisting them with selling and taking profit when that is the best option as well.